Trade unions and other large groups of workers could negotiate more favourable terms than the maximum charges set in the Pension (Amendment) Act 2002 when the new Personal Retirement Savings Accounts (PRSAs) come on the market early next year. Charges for the standard new flexible and portable pension plans have been capped at 5 per cent of contributions and 1 per cent of annual assets.
But there was nothing in the Act to stop large groups of workers seeking better terms from competing product providers, Ms Anne Vaughan from the Department of Social Community and Family Affairs told a briefing on the new legislation.
Ms Vaughan said there would be a review within three years to see if PRSAs, which are aimed at increasing the proportion of the workforce covered by pension schemes, had been successful. Just less than 50 per cent of the workforce is covered by pension schemes at present.
New figures due from the Central Statistics Office at the end of May are expected to show further slippage in this percentage.
The review could consider requiring employers to contribute to employee PRSAs, she said. The Act requires employers who do not offer an occupational scheme to provide access to a standard PRSA.
The Pensions Board will be ready to start taking applications from PRSA providers for product authorisation from September, chief executive Ms Anne Maher said at the briefing.
The board has three months to decide on the applications so the first products are expected to come to the market early next year. The board expects 10-15 providers to apply. A pensions ombudsman will be appointed "as soon as possible", Ms Vaughan said. One of the first sections of the Act to come into effect - from June 1st - will provide for the preservation and revaluation of pre-1991 service benefits for employees leaving service and will reduce the qualifying period for pension scheme benefits from five to two years.
